Futureview Securities Limited has identified inflationary pressure as a major risk to return on investment across assets classes and urged investors to focus on stocks with strong fundamentals.
At the moment, many investors are apprehensive of the likely impacts of energy crises on the earnings of quoted companies at the end of the first quota this year. This has created another level of uncertainties in investment decision.
Managing Director, Futureview Securities, Ijeoma Amaechi, advised investors to focus more on the stocks of companies with strong fundamentals to minimize risks.
“One of the key challenges facing investors in the Nigerian Market is inflation. To earn Real Return on Investment (ROI), investors need to earn ROI that is higher than inflation which is currently at 15.7 per cent. This return can be achieved in the Stock Market because of the low interest rate regime in the fixed income space.
“Unfavourable macroeconomic factors as well as uncertainties surrounding pre-election year are also negatively influencing investors’ appetite for risky assets. Investors should diversify their portfolios and have a mix of risk assets and fixed income assets. The risk assets will provide opportunity for high returns while the fixed income assets will provide buffer against unexpected negative returns from the Stock Market. It is also noteworthy that investment in mutual funds is a hedge against inflation,’’